Scorpio Tankers Q2 Earnings Call Highlights

Key Points

• Record second-quarter performance: Scorpio Tankers reported adjusted EBITDA of $300.5 million and adjusted net income of $243.7 million, with IFRS net income reaching $388 million after a $154 million gain from selling 10 vessels.
• Balance sheet and shareholder returns strengthened: The company refinanced expensive debt with $605 million of convertible bonds issued at roughly a 1% yield, reduced cash break-even below $11,000 per day, and ended with $2.4 billion in liquidity. It returned more than $175 million to shareholders through a $0.45 dividend and $155 million in share repurchases.
• Management sees supportive tanker fundamentals: Longer shipping distances, aging and sanctioned tonnage, and flexible deployment of LR2 vessels between clean-product and crude trades are supporting rates above $30,000 per day, despite lower refined-product volumes.

Scorpio Tankers NYSE: STNG reported its strongest quarterly results in company history for the second quarter of 2026, supported by elevated tanker rates, vessel sales and continued balance-sheet refinancing efforts.

Chief Executive Officer Emanuele Lauro said the company generated adjusted EBITDA of more than $300 million and adjusted net income of $243.7 million during the quarter. Chief Financial Officer Chris Avella said adjusted EBITDA totaled $300.5 million, while IFRS net income was $388 million, including a $154 million gain from the sale of 10 vessels during the period.

Management said it continued to focus on lowering funding costs, reducing cash break-even levels, renewing the fleet and returning capital to shareholders.

Financing and shareholder returns

Lauro said Scorpio Tankers issued $605 million of convertible bonds at a yield to maturity of approximately 1% and repaid $589 million of debt carrying interest rates between 5% and 7.5%. Avella said the company repaid more than $389 million of secured debt across five facilities during the second quarter and redeemed $200 million of 7.5% senior unsecured notes in July.

The company’s cash break-even rate, including vessel operating costs, cash general and administrative expense, cash interest and scheduled loan amortization, fell below $11,000 per day, according to Avella. He said that at a daily rate of $20,000, the company could generate up to $246 million in annual cash flow, while a $30,000 daily rate could generate up to $520 million.

As of July 28, Scorpio Tankers had $2.2 billion in cash and $483 million of availability under revolving credit facilities, for total available liquidity of $2.4 billion, Avella said. He added that the company’s net debt position had improved by $4.2 billion since December 2021, reaching net cash of $1.3 billion, or approximately $26 per share.

The board declared a quarterly dividend of $0.45 per share. Scorpio Tankers also repurchased approximately 2 million shares for $155 million during the quarter. Lauro said the combined dividend and buyback represented more than $175 million returned to shareholders.

Addressing the company’s convertible notes, President Robert Bugbee said Scorpio Tankers has the option to settle conversions in cash, common shares or a combination of both. The notes have a conversion trigger at 130% above the conversion price, he said, and the maximum number of shares that could be issued is 6 million.

Fleet renewal and expansion

Since the beginning of the year, Scorpio Tankers has sold 19 vessels, primarily ships that were 11 or 12 years old, Lauro said. He said most of the vessels were sold for more than the company had paid for them more than a decade earlier.

The company’s last four vessel sales were LR2 tankers sold at prices above the cost of LR2 newbuildings currently on order, according to Lauro. Scorpio Tankers was also set to take delivery of its first MR newbuilding, the STI Moxie, on July 31, reducing its orderbook to 13 vessels.

Avella said the company has agreements or letters of intent involving 14 newbuilding vessels and an equity contribution toward a minority interest in a joint venture involving eight VLCCs. Remaining newbuilding and joint-venture commitments totaled slightly more than $978 million, excluding any potential financing, with payments spread over the next four years.

Lauro said the VLCC joint venture was strategically motivated rather than financially significant relative to Scorpio Tankers’ balance sheet. He said the partner is the ultimate beneficial owner of a large private Chinese shipbuilder, with whom the company has had a relationship for years. Scorpio Tankers intends to potentially operate the vessels after delivery, he said.

Market outlook centers on ton-mile demand

James Doyle, head of corporate development and investor relations, said product tanker rates remained above $30,000 per day despite lower seaborne volumes during what is usually a seasonally slower period. He said longer voyage distances have offset lower refined-product volumes and tightened effective vessel supply.

According to Doyle, seaborne refined-product exports declined by 2.3 million barrels per day, or 11% year over year, in June. However, refinery capacity has increasingly shifted away from consuming regions, particularly toward the Middle East and China, supporting longer-distance trade.

Doyle said global visible inventories had fallen by more than 400 million barrels since the start of the conflict referenced on the call. He said future refined-product demand would need to be met increasingly through higher refinery runs rather than further inventory drawdowns, potentially increasing seaborne exports.

Management also pointed to an aging fleet and sanctioned tonnage as constraints on effective supply. Doyle said 21% of the product tanker fleet is more than 20 years old, a figure expected to reach 31% by 2028. He said the company expects fleet growth to average roughly 3% to 4% over the next three years, potentially lower after accounting for vessel age, sanctioned capacity and the crossover of LR2 tankers into crude trading.

LR2 flexibility and charter activity

Chief Commercial Officer Lars Dencker Nielsen said Scorpio Tankers has moved some LR2s into the crude market to capture higher earnings, while continuing to assess deployment on a vessel-by-vessel basis. He said LR2 and Aframax vessels have become increasingly interchangeable between clean-product and crude trades over the past several years.

Nielsen estimated that more than 170 clean LR2s were trading in the crude market and said the movement of vessels between clean and dirty trades depends primarily on relative time-charter-equivalent earnings. He said vessels could return quickly to clean-product trading if the rate spread changes.

The company entered charter agreements for three MR vessels for minimum terms of three years, with the vessels expected to begin those charters in December. Lauro said the timing allows Scorpio Tankers to remain exposed to the current spot market before the agreements begin.

Nielsen said time-charter inquiry has remained strong, including from oil companies and traders, though Scorpio Tankers continues to take an opportunistic and balanced approach to contracting its fleet.

About Scorpio Tankers (NYSE:STNG)

Scorpio Tankers Inc NYSE: STNG is an independent provider of marine transportation services, specializing in the carriage of refined petroleum products. The company’s core operations focus on moving clean petroleum cargoes—such as gasoline, diesel, jet fuel and naphtha—on a global scale. By catering to both spot and time charter markets, Scorpio Tankers enables energy companies, refiners and traders to manage their supply chains with flexibility and reliability.

The company’s fleet is composed of modern, eco-designed product tankers, including medium range (MR) and long range (LR) vessels.

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